Tesco is set to announce a thumping annual loss of more than £3billion next week.

Britain’s biggest supermarket will take a big hit from slashing the value of its stores by around £4bn.

Bosses are also likely to reveal the firm’s pension deficit has ballooned to more than £5bn.

The company could set out plans to plug the black hole, which currently stands at a whopping £4.2bn.

However, the annual results will show measures taken by chief ­executive Dave Lewis to revive the industry giant are starting to work.

Drastic: Tesco chief executive Dave Lewis

A slump in sales in its UK stores has slowed, with industry data suggesting it is close to ending a decline in market share.

However, next week’s results will be dominated by past issues.

Tesco has been left reeling from cut-throat competition in the UK and abroad, which led to the departure of previous boss Phil Clarke.

If that weren’t bad enough, the firm was forced to admit it fiddled its books to artificially boost profits.

Lewis, nicknamed “Drastic” Dave, from his time at Unilever, has begun an ­overhaul of the world’s third largest retailer.

But it won’t prevent Tesco announcing a trading profit of around £1.4bn for the year to February, less than half the £3.3bn made the year before and the third straight year of decline.

Tesco: Big losses (Image: PA)

That is before it writes down the value of its store estate by an ­estimated £4bn.

Rivals Sainsbury’s and Morrisons have already taken the same step to reflect falling sales and store closures.

A £300million bill for restructuring and closing its head office in ­Cheshunt, Hertfordshire, along with changes to the way it accounted for previous income from suppliers is expected to lead to a statutory loss of more than £3bn.

Bruno Monteyne, retail analyst at Bernstein, said: “Dave Lewis has made the right initial steps on a long journey to potentially stabilising the company.